Books on Bulgaria
% of GDP
Update No: 106 - (23/03/06)
Countdown to January
Bulgarian Prime Minister, Sergey Stanishev, in a meeting in March with European
Union (EU) envoys was affirmative on all institutions' commitment to work for
achieving the accession to the EU next January. This is the lynchpin of the
programme of his new government, elected in March 2005.
Ambassadors of EU countries to Sofia gathered at a working lunch with the
Austrian Ambassador H.E. Karl Diem on March 16th. The primary importance
attached to the success of the judicial reform here was signified by the
attendance also of Justice Minister, Georgi Petkanov.
Emerging from the meeting, the EU envoys expressed their satisfaction with the
broad and open conversation they had with the Bulgarian prime minister.
Stanishev had accentuated the progress made particularly in the EC red-flagged
The foreign diplomats received a report on Bulgaria's achievements over the last
few months. Yet, Sergey Stanishev warned the ambassadors a decision to delay
Bulgaria's entry by a year - until 2008 - would send off a very negative signal
to the entire region.
The Bulgarian premier took part in the spring session of the European Council in
Brussels March 23-24, the Government's press service announced. The meeting
focused on the Lisbon Strategy for enhancing the economic growth and increasing
Continuous EU monitoring of reforms in place
It is not just one meeting of ambassadors that counts, however, as much as the
regular presence of EU monitors. The strict monitoring the European Commission
exercises over Bulgarian reforms will prepare the country for its upcoming EU
membership, said Prime Minister Sergei Stanishev during his meeting with the
director of the EC enlargement directorate-general, Michael Lee.
Lee's previous visit to Bulgaria occurred in 2001. Now new positive developments
can be observed, said Stanishev.
Stanishev said the ruling coalition has accepted nearly 60 new laws and
regulations since the beginning of its mandate, the Bulgarian National Radio
reported. The non-governmental sector exercises additional control over reform
implementation, said Stanishev.
The EU is experiencing the birth of new sentiments and thoughts concerning the
enlargement process, Lee said. The EC will follow its duties and present an
objective analysis of the Bulgaria and Romania's readiness to join the EU.
Since November 2005 Bulgaria's progress is visible through the acceptance of new
regulations and the appointment of a new Prosecutor-General, said Lee.
The country still needs to increase its capacity to utilise EU funds, Lee said.
Getting businessmen on side
In a meeting with industrial businesses from the European Round Table (ERT),
Prime Minister, Sergey Stanishev, declared his government's commitment to wrap
up all pre-accession engagements stating that Bulgaria is readier for EU
accession than the ten newcomers to the bloc upon their entry in 2004.
Bulgaria will work even stronger to set up a friendlier business climate here,
the premier stated in a cutting-distance manner of speaking English fluently.
He admitted there are still fields to expect results from, such as the judiciary
system, infrastructure and communications development and administrative
capacity, but they are on the right track and will learn from the experience of
EU10 latest member states, Stanishev pointed out.
The forum of ERT put forward also tentative issues in the field of education and
healthcare, urged the government to further cut the red tape, protect the
intellectual property rights and adopt steps to reduce the VAT rate.
Under-financed education system and brain drainage are creating shortages of
skilled workers, noted Baron Daniel Janssen, Chairman of the Board of Directors
of Solvay S.A.
While praising Bulgaria's tremendous achievement in the single market area, he
stressed the need of a strengthened dialogue between the government and the
private sector, including a more sector-based approach.
Over the last seven years, the ERT has held annual meetings with three Bulgarian
governments, putting forward a different view on the country's desirable steps
towards business and economic progress.
The European Round Table is a forum of some 47 European industrial leaders
aiming at promotion of the competitiveness and growth of Europe's economy.
Companies of ERT members cover a wide range of industry sectors, with
headquarters situated in 18 countries of Europe.
Their combined turnover is 1,500bn Euro, employing about 45 million people
Foreign companies in Bulgaria face problems with corruption
Foreign companies operating in Bulgaria face corruption and the grey economy
as their main problems, chairperson of the European Round Table of
Industrialists (ERT) Baron Daniel Janssen said recently.
The ERT delegation met for the seventh time representatives of the Bulgarian
Cabinet, the Bulgarian National Radio reported. Representatives of European
companies demanded more efficient measures against these two problems. A country
with economic indicators like Bulgaria should attract more foreign investment,
Prime Minister Stanishev listed the measures undertaken so far to counter the
negative developments. Political will for change is present and the process will
continue after the issuing of the European Commission report on Bulgaria's
readiness to join the EU, Stanishev said.
The high trade deficit remains one of the main problems to Bulgaria's economic
development, Stanishev said. Still, it does not pose a major threat as budget
surpluses and foreign investment counter its negative effects, the prime
Bulgaria's government aims at improving the environment for investors and
business development, he said. National policies will focus on limiting
bureaucratic hindrances to business establishment and operations and on aiding
foreign investment initiatives.
Govt adopts strategy for Bulgaria Air Privatisation
At its regular meeting on February 2nd, the council of ministers adopted a
strategy for the privatisation of flag carrier Bulgaria Air, Transport Minister,
Peter Moutafchiev, said, Sofia News Agency reported.
He said the strategy for privatisation of Bulgaria Air is much better than the
previous one. This is the third attempt to privatise Bulgaria Air. A total of
30,159 shares will be offered at a tender and the state will retain only one
share so that it could participate in the supervision of the company. Mutafchiev
said there were four basic criteria, according to which the investor would be
selected, offered price in the privatisation deal, investments, which the future
buyer intends to make, the increase of destinations and the finances of the
airline company and most important the social strategy of the investor will all
be taken into consideration. The aim of the company's privatisation is to
guarantee a long-term development of Bulgaria Air and its competitiveness on the
aviation market, Mutafchiev said.
Banking sector most dynamic in Central and E. Europe
According to a press release of UK Standard and Poors credit rating agency,
Bulgaria is one of the most dynamically evolving financial sectors in Central
and Eastern Europe. The agency rated Bulgaria at an average BB at end 2005 from
B+ at year end 2001. S&P believes that since the 1996 banking crisis, the
Bulgarian banking sector has strengthened. The credit agency also said that the
explosive credit growth that Bulgarian banks have experienced since 2001 but
simultaneously believes that the banking operates with improved risk-management
frameworks supported by the know-how from its western parents, benefits from
stronger financial standing of households and corporations, and stronger
regulatory regime. According to the credit analysers future creditworthiness and
an increase in ratings will depend on managing the evolving credit environment,
maintaining prudent capitalisation, meeting the growing demands for financial
products, and accessing funding, New Europe reported.
It is expected that high economic growth will continue and EU reforms will
support positive trends in the macroeconomic stability, employment, and
investments - both foreign direct investment (FDI) and domestic. The agency
pointed out that the banking sector is characterised by intense rivalry among
large and midsize banks, fighting for market share which in turn will benefit
consumers in terms of attractive new products and pricing but has led to
pressure on capitalisation and the balance between risks and rewards. According
to S&P data, the largest market share with total assets of 14 per cent holds
DSK bank, owned by Hungary's OTP bank followed by Bulbank (11 per cent), the
United Bulgarian Bank (10.1) and Raiffeisen Bank. The report noted an increase
in the deposits of non-financial institutions, including household deposits,
which were supported by improved wealth levels and high corporate liquidity.
"In addition, the Bulgarian National Bank's (BNB) liquidity draining
measures have started to bite, particularly for domestic banks with aggressive
growth strategies or weaker commercial franchises," the report read.
According to the report, some banks even adopt high pricing strategies to
attract depositors into longer term saving accounts. Interest rates on current
accounts averaged three per cent while savings accounts over two years offered
up to seven per cent in November 2005.
Bulgaria, Russia discuss gas transit after 2010
The Russian and Bulgarian governments have started to discuss conditions for gas
transit after 2010, Industry and Energy Minister, Viktor Khristenko, said after
a meeting with Bulgarian Economics and Energy Minister, Roumen Ovcharov,
Interfax News Agency reported.
"We are interested in having transit relations with Bulgaria for 20 years
ahead," said Khristenko, who is also a Gazprom board member. "Transit
questions were brought up during negotiations, so that based on their answers a
decision can be reached on potential for the period after 2010," the
minister said. "If the negotiators agree that it is necessary to change the
current transit conditions, they will be changed. Especially if this is
important for future relations between Russia and Bulgaria in the gas sphere;
that is after 2010," he said. The Russian minister thanked Bulgaria for
meeting the conditions of the gas transit agreement in full. "All
conditions in contracts to transit Russian gas by Bulgaria are being met. In
this sense Bulgaria is not a risk for European consumers of Russian gas,"
He also said that consultations on gas transit conditions will continue in the
near future. "The main task is to establish the characteristics of our
future relations in the gas sphere. For these characteristics to be established,
it is necessary to start negotiations now," he said.
"One of Russia's main positions is that long-term transit should be
connected with cash payments. I do not see disagreements on this issue with my
Bulgarian colleague," Khristenko said. In turn, the Bulgarian minister said
that Bulgaria is spending a lot of effort on finding alternative fuel supplies.
"Every state should have alternative fuel supplies. Bulgaria will look for
them, but this will in no way influence projects being jointly implemented with
Russia," he said. Gazprom earlier proposed to Bulgaria to end a barter
agreement for payment of transit services. The state gas corporation Bulgargaz
said it rejected this proposal from Gazprom to review the conditions of a
12-year contract signed in 1998 to transit Russian gas through Bulgaria, Turkey,
Greece and Macedonia. According to the current conditions of the contract
between Gazexport and Bulgargaz, the Russian gas giant pays for transit services
through Bulgaria with gas.
Gazprom supplies gas to Bulgaria at 258 Euro per 1,000 cubic metres, while the
price of gas supplied as payment of transit is 83 Euro per 1,000 cubic metres.
Bulgaria to deepen transport cooperation with Armenia
On the second day of its official visit to Armenia, a Bulgarian parliamentary
delegation, headed by National Assembly Chairman, Georgi Pirinski, met with
Armenian President, Robert Kocharian, and speaker of the Armenian Parliament,
Artur Baghdasaryan, in Yerevan, the National Assembly press office said, Sofia
The sides discussed the intensive political dialogue between the two countries,
the development and strengthening of transport ties and cooperation in education
and culture. Pirinski proposed to organise a conference on co-operation in
transport in mid-2006. For his part, Baghdasaryan said that Armenia needs deeper
transport co-operation with Bulgaria as it will facilitate the development of
economic contacts. In this context, Baghdasaryan proposed holding discussions by
the two countries' parliamentarians in the summer.
Romania, Bulgaria to improve trade
A delegation of the National Union of the Romanian Employers (UNPR), led by its
president, Marian Petre Milut, met with Bulgaria's ambassador to Romania,
Konstantin Andreev, and with the embassy's secretary on trade and economic
issues, Atanas Stamtov. The meeting is part of UNPR's strategy to support trade
relations and secure borders considering the anticipated EU accession, reported
Sofia News Agency.
During the talks, both sides agreed to promote a cross-border cooperation action
plan that will look at the development of infrastructure, protection and
management of the environment, economic development and bilateral actions
between citizens, institutions and small communities. The PHARE CBC programme
grants financial support to cross-border cooperation during the pre-accession
period. After EU accession, both countries will receive structural funds to
continue the programmes. The programme focused on financing large investment
programmes until now but the new programme due to end in 2009, will direct the
available funds to supporting initiatives in the domain. Andreev said that visas
should be eliminated for businesspersons that invest in the two countries and
continue trans-border projects to create business offices along the Danube. He
added that trade relations between Romania and Bulgaria are minimal and
entrepreneurs of Bulgaria should create proper conditions for the development of
the business environment.
"Through a public-private partnership we should succeed in creating the
needed infrastructure for a business environment," said Milut. "The
Danube should become a business environment and not a border. Starting in 2007,
once the Euro regions have been created, the Danube will become a highway that
should be used with the purpose of creating business opportunities," he
added. Bulgarian Prime Minister, Sergey Stanishev, and his Romanian host and
counterpart, Calin Popescu Tariceanu, during an official visit to Bucharest,
believed that the Danube bridge at Vidin-Kalafat is a priority in the bilateral
relations of Bulgaria and Romania.
Bulgaria pays in advance part of IMF debt
An economic boom in 2005 has enabled Bulgaria to continue repaying its debt to
the International Monetary Fund (IMF) ahead of schedule, the Sofia News Agency
quoted Bulgarian finance ministry as saying.
On February 1st, Bulgaria paid in advance 151.4 million Euro from its
International Monetary Fund (IMF) debt, representatives of the Finance Ministry
said. Bulgaria has covered six tranches of the Two-Year stand-by agreement with
the IMF. This is the second time in the last couple of weeks that Bulgaria has
provided advance payment. At the end of 2005 the country made three payments to
IMF totalling 147.4 million Euro. Bulgaria's debt to the IMF after the
transactions is nearly 393.7 million Euro. The finance ministry explained, that
owing to the nation's booming economy last year, the fiscal reserve of Bulgaria
is on the rise. Repaying its debts ahead of schedule will reduce both the
country's foreign debt and its state guaranteed debt, which totalled 5.39
billion Euro as of December 31, 2005.
Italy, Bulgaria discuss cooperation in infrastructure
Regional Development and Public Works Minister, Assen Gagaouzov, met Italy's
Infrastructure and Transport Minister, Prof. Pietro Lunardi, the regional
development ministry press centre said, Sofia News Agency reported.
During the meeting, both sides discussed the possibilities for cooperation in
infrastructure, cultural exchange and rehabilitation of underdeveloped urban
zones. Their talks focused also on Bulgaria's bid to join the EU. Lunardi
stressed that currently Italy is engaged in a large-scale plan for
infrastructure recovery and is open to joint initiatives with Bulgaria. Italy
has good companies in the field of construction and roads and could be useful in
the implementation of similar projects in Bulgaria, Lunardi added. "We are
grateful to Italy and we shall rely on its assistance," Gagaouzov said. He
informed his Italian counterpart that a strategy for the development of
Bulgaria's infrastructure was being prepared, which is to be approved by the
council of ministers.
Vodafone partners with Bulgaria's Mobiltel
Vodafone Group PLC, one of the world's leading mobile operators has signed a
partnership agreement with Mobiltel, the Bulgarian mobile operator of Telekom
Austria, reported Sofia News Agency.
Under the terms of the agreement, Mobiltel will be able to provide its customers
with Vodafone products and services for international voice and data roaming,
business and consumer propositions. It also provides all of Vodaphone's
subsidiaries with access to the company's international mobile services while
travelling in Bulgaria. Vodafone's products and services will be dual branded in
Bulgaria by Mobiltel, combining Mobiltel's nationally recognised brand with
Vodafone's global brand. Arun Sarin chief executive at Vodafone said that it
intends to develop its partnership agreement with Mobiltel to ensure that both
Vodafone and Mobiltel customers get the best in mobile services.